Lax U.S. Sanctions Enforcement Yields Windfall for Iran’s Terrorist Proxies

Latest Developments

Iran’s foreign minister on October 18 called for an embargo of Israel by oil-producing nations to protest Israel’s war against Hamas in Gaza. Hossein Amir-Abdollahian also urged the Organization of Islamic Cooperation (OIC) to expel Israeli ambassadors. The call comes after days of threats from Tehran to intervene in the conflict if Israel continues its campaign against Hamas.

The Biden administration’s lax sanctions enforcement has led to a dramatic rise in revenues for Iran, estimated to be up to $95 billion since 2020. Iran’s profits from illegal oil sales facilitate its ability to fund Hamas and other terrorist groups.

Expert Analysis

“The money that goes to Iran funds aggression abroad and oppression at home. Since 2021, Tehran’s export revenue and its access to it have significantly increased; the result has been more death and misery across the Middle East. As long as the Islamist regime rules Tehran, peace in the Middle East remains elusive.” — Saeed Ghasseminejad, FDD Senior Iran and Financial Economics Advisor

“Iran’s climbing oil and petrochemical exports, as well as other forms of illicit revenue generation, are what underwrote and emboldened Hamas. It’s time to stop disconnecting the dots between patron and proxy and put the kibosh on Tehran’s terror finance.” — Behnam Ben Taleblu, FDD Senior Fellow

Sanctions Significantly Reduced Pre-2020 Revenues

The Trump administration withdrew from the 2015 nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA), in May 2018 and fully restored pre-JCPOA levels of sanctions six months later. In 2019, Trump terminated a waiver that allowed select nations to import even low quantities of Iranian crude oil.

The policy caused Iran’s oil exports to drop from 2.9 million barrels per day in April 2019 to only 395,000 barrels per day the next month. From May 2019 to January 2021, Iran’s oil exports averaged 775,000 barrels per day. In the same period, Iran accumulated $25 billion in oil revenue. Trump’s maximum pressure campaign also led to a decline in non-oil exports, such as petrochemicals, natural gas, and industrial metals. According to the World Bank, Iran’s overall exports declined in 2019 and 2020 by 17.3 and 12.8 percent, respectively.

Biden’s Lack of Enforcement

Iran’s exports and revenues — from which it funds its terrorist proxies — began to rise after President Joe Biden took office in 2021. The administration began efforts to revive the JCPOA and relaxed its enforcement of Trump-era sanctions. In 2021 and 2022, Iran’s oil exports reached 1.14 million barrels a day. Iran’s oil exports rose again in 2023, with 1.4 million barrels per day exported from January to September. Snapshots from August and September 2023 reported by Bloomberg News indicate another jump to exports of 2 million barrels per day. Tehran’s oil export revenue since the start of Biden’s term is approximately $95 billion. The World Bank’s estimate for overall exports shows 5.2 percent growth in 2021 and 8.2 percent growth in 2022.

“Lax Sanctions Enforcement Has Yielded a Windfall for Iran,” by Saeed Ghasseminejad and Behnam Ben Taleblu

“The Monetary Value of Relaxed Oil Sanctions Enforcement by the Biden Administration,” by Saeed Ghasseminejad

“Israel Warns Iran Against Opening Second Front,” FDD Flash Brief

“Iran’s Illicit Oil Exports Surge in August Amid U.S. Failure to Enforce Sanctions,” FDD Flash Brief